Justices Void Damages Against Insurer

April 23, 1986|By Glen Elsasser, Chicago Tribune.

WASHINGTON — The U.S. Supreme Court voided Tuesday a $3.5 million damage award against an insurance company because an Alabama Supreme Court justice who participated in the case had a similar claim against an another insurer.

In an opinion written by Chief Justice Warren Burger, the high court ruled that Alabama Justice Thomas Embry`s role in the case violated the due process rights of the Aetna Life Insurance Co.

A jury had awarded a Mobile couple, Margaret and Roger Lavoie, $3.5 million in punitive damages from Aetna for paying only $1,650 of a $3,028 medical claim.

In 1984 opinion written by Embry, the Alabama Supreme Court upheld, by a vote of 5-4, the largest damage award ever approved by that court. While the Lavoie case was pending before the Alabama high court, Embry had filed a suit on behalf of himself and other state employees against Blue Cross-Blue Shield seeking punitive damages for refusing to pay medical claims in full.

Aetna later challenged Embry`s participation in the case, but the Alabama Supreme Court rejected the company`s motion for a new hearing.

In Tuesday`s decision, the high court declined to rule on other issues Aetna had raised: whether the $3.5 million award violated the Eighth Amendment`s excessive fines clause and whether the lack of state standards for such awards denied the company its due process rights. While acknowledging these were important issues, Burger said there was no reason to decide them now.

The case now returns to the Alabama Supreme Court for a new hearing on whether the damage award was excessive. The high court rejected Aetna`s contention that all the Alabama Supreme Court justices should have been disqualified from hearing the case.

Burger pointed out that there was no evidence in the record that the other justices had known about Embry`s suit against Blue Cross-Blue Shield. Embry, who retired last year, received a $30,000 settlement from Blue Cross-Blue Shield.

``We hold simply that when Justice Embry made that judgment (in the Aetna case),`` Burger said, ``he acted as a judge in his own case.`` The high court also found that Embry`s interest was ``direct, personal, substantial and pecuniary.``

The Supreme Court was unanimous in concluding that Embry should have disqualified himself from the case. The high court has already agreed to review next year an Alabama law that provides for a 10 percent penalty on unsuccessful appeals of money judgments.

In a second ruling Tuesday, the Supreme Court refused to impose tougher standards for issuing search warrants for allegedly obscene movies and books. Justice William Rehnquist said in the court`s 6-3 opinion that prosecutors must indicate only that there is probability such materials are obscene, not an actual showing of obscenity.

New York state courts had ordered the suppression of five films seized from an Erie County store because affidavits supporting the warrant application showed only the sexual activities depicted in the films. While the New York appeals court conceded many of these scenes seemed ``patently offensive by any constitutional standard,`` it held that the detective should have provided more information for the judge to determine if the films as a whole were obscene and violated community standards.

The Supreme Court conducted its own review of the affidavits and found

``more than enough information`` for a judge to conclude there was a ``fair probability`` the films met the state`s definition of obscenity.